How the $30,000 instant asset write off scheme affects you

There has been big news during the week that has got everybody talking, that’s right, it is the newly proposed $30,000 instant asset write off scheme.  As of Tuesday 2nd April, the Australian Government has increased the asset write off scheme from $25,000 to $30,000 whilst allowing medium sized organisations to join the party as well.


Some 3.4 million businesses will now be eligible for the scheme under the expansion as the Coalition counters Labour’s rival Australian Investment Guarantee Plan.


Small and medium businesses with less than $50 million in annual revenue will now fit the criteria, dramatically up from a $10 million revenue cap seen previously. Josh Frydenberg stated, “businesses will be eligible to claim the write-off every time an asset under the cap is purchased till the June 30, 2020 cut-off”.


The revised scheme will see an additional 22,000 businesses become eligible for the write-off whilst allowing the existing businesses already using the scheme to benefit further. This will account for an extra $300 million in the next two financial years to be injected into the economy as business “activity and investment” rises. “Allowing a café to get a new fridge or grill, a plumber to buy new tools or a courier a new van,” the Treasurer told Parliament.


In a statement following the federal budget, small business minister Michaelia Cash said, “The increase of this initiative will further improve cashflow for hardworking Australian small-business owners by bringing forward tax deductions, providing a boost to small-business activity and encouraging more small businesses to reinvest in their operations, and replace or upgrade their assets,”


Whilst the newly revised scheme is predicted to generate approximately 700 million dollars in savings and pleased many small/medium business advocates the real question is, do you know how it works?


While the write-off scheme has been popular since its 2015 introduction to small business owners, there is also a very significant portion of business owners who are completely unaware of it with a study last year finding nearly 50% of small/medium business owners had no idea about it.


*Our tip: If you have never heard of the scheme or are unware of its benefits, speak to your accountant. If your accountant doesn’t know or has ever mentioned anything about it to you maybe start looking for another one…


So how does it work you may ask?

If your small or medium business is eligible and is purchasing an eligible asset, you are able to make a deduction on the taxable purpose proportion of the new asset. This is the proportion of your new asset that will be used for earning assessable income for your business. In order to find this amount, a subtraction of any private use proportion is necessary, which is the proportion of the time the asset will be used outside of the business. Remember, it is only the taxable purpose portion of the asset that is eligible for deduction and the entire cost of the asset must be of a value less than $30,000.


We look forward to constructively using the scheme moving forward and we hope you and your accountant are able to beneficially use it to.


If you are still confused or need more help we suggest you visit the Australian Tax Office website.




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